SENIOR Tories want a swingeing one per cent cap on welfare benefit rises extended for six years to save taxpayers an extra £11billion, Government sources said last night.

Highlighting a key battleground for the next election, ministers aim to challenge Labour to match plans for below-inflation annual increases in working-age benefits until 2018.

It would mean cutting income for millions of jobless claimants, part-time and low income workers and families on tax credits.

Tory chiefs say it will be popular with many middle-income voters fed up with work-shy scroungers ripping off the welfare system.

They calculate a saving of £700 for every working household by extending the cap – currently set to last until 2015 – a further three years.

As well as enraging Labour, it will create Coalition tensions, particularly after Lib Dem ministers blocked Tory plans for a benefits freeze.

A senior Downing Street source said: “If they win the next election, Labour would have to increase Britain’s debt by £700 per working household to pay for their policy of uncapped benefits.”

The one per cent cap, removing a link with inflation, was announced by Chancellor George Osborne in his Autumn Statement. It is due to come into force in April and last to the end of the 2015-16 financial year.

The proposals would be a clear signal the age of austerity is set to last long into the next Parliament.

Earlier this week the Government unveiled a Parliamentary bill designed to enshrine the cap in law.

MPs are due to vote on the measure next year, with Labour chiefs saying they plan to oppose it. The source added: “The Government’s policy of limiting benefits to one per cent rises at a time when public sector pay is limited to one per cent will save £11billion over three years.

This is the Tories floating ideas for their next manifesto

A senior Lib Dem source

This is the Tories floating ideas for their next manifesto

A senior Lib Dem source

“Labour have indicated they will vote against the bill but not how they would pay for it, effectively confirming they would add £11billion to the national debt in 2015-18.”

Senior Tories see the issue of benefits as a political dividing line. They plan to repeatedly warn that Labour spending plans could plunge the public finances into a new crisis.

Conservative chairman Grant Shapps said: “This Government is having to make difficult choices to deal with the deficit and so it is fair that when private sector workers are squeezed and we are limiting public sector pay to one per cent we do the same for benefits as well.”

A senior Lib Dem source said: “This is the Tories floating ideas for their next manifesto.”

Labour MP Grahame Morris said: “Freezing benefits below inflation for six years would be completely unsustainable.

“The Tories seem to be demanding that the disabled and job seekers pay the price for this Government’s failing economic policy.”